Commission Less Than Mininum Wage?

Question

I have a question about commission. I was paid commission only, which turned out to be less than minimum wage. I had to set up appts for an insurance agent. He then would go out to the appts and only pay me if he made a sale. I quit because he ended up paying me only like three bucks an hour. Was this legal?

Answer 1

I work for a company that has a lot of contractors working for it, but it's a small business. I am kind of in the same situation as you, but I am being paid as a contractor, but I am NOT a contractor because I am paid hourly first off, and secondly the owner controls what I do, etc. Contractors get paid by the commission from a sale that they made etc. you can be a contractor & not make any sales which means you will not be receiving a paycheck that week. The amount on your paycheck depends on you as the contractor as to how much is on there. Make sale=MONEY make little or no sales=LITTLE OR NO MONEY. So if you controlled the amount you get paid, then you are a contractor because of commission you earn. Yes, that is legal. BUT if you are in the same situation as I am, then it is illegal..!! No if, and, or but about it. You can report the owner for claiming you as a contractor (they do that because it saves them thousands of dollars each year because on employees, the owner has to pay taxes on each one, but contractors they don't). This should answer your question. If you have any more questions you can e-mail me & I will let you know everything because I have been reading on this for a while because I am reporting my employer!!

Answer 2

You should check with the office of the insurance commissioner in your state.  In the state where I live, that would not be legal.  You were being paid on a commission basis, and did not have an insurance agent license. The agent that was doing this could be subject to disciplinary action, fines, etc.

I discussed this scenario with the Delaware Insurance Commissioner a few years ago.

Answer 3

Actually, from what I can tell, it's not legal.  Under the Fair Labor Standards Act, anyone being paid commission must be paid at least minimum wage.  Your state has nothing to do with it.  There is an exemption from this rule for executive, administrative, outside sales, and other "white collar" jobs.  However, I don't believe your job met the requirements for the exemption.  I could be misinterpreting what I read, so you would want to contact a local office of the Department of Labor for more information.  You can also go here for some basic information:

www.dol.gov

Hope this helps!!

P.S. I'm not even sure what you've described would qualify as a commission, since all you did was set the appointments.  Now if you were making outgoing calls to set up a sale, then maybe, but if they were incoming calls, I don't believe so.  You should have been paid an hourly salary.

Answer 4

Yes it probably was unless your state has some protection.  People on commission or on jobs subject to tipping are not covered by federal minimum wage laws.

Answer 5

Depends on whether you were working as an employee or not.  The job you describe could be either as an employee or an independent contractor.   If you were an employee, he has to pay you minimum wage.

Since you weren't paid hourly, it's very possible that you are legitimately an independent contractor.  If he set your hours and place of work, like you worked 9-4 at his office, you are most likely an employee.  If you worked from home, setting your own hours, you are probably an independent contractor and there is no requirement to pay you the minimum wage.